Algonquin Power moving headquarters to U.S. in bid to attract more investment

Algonquin Power & Utilities Corp. AQN-T said on Friday that it plans to move its corporate headquarters to the United States, putting executives closer to the bulk of its operations and exposing the company to a larger pool of investors.

The redomicile of Algonquin, currently based in Oakville, Ont., would come after years of restructuring that has resulted in the majority of its revenue generated by electricity distributors it owns in several U.S. states.

The company, a former market darling whose stock has languished in recent years, said it planned to relocate its head office to Chicago, but maintain a presence in Oakville. It will seek shareholder approval to do so in the first half of 2027.

“Today, over 80 per cent of our operations are located in the United States with less than 5 per cent in Canada,” Algonquin chief executive officer Rod West said on a conference call. “Redomicile into the U.S. would better align our corporate structure with our assets and where we expect to grow.”

In addition, Mr. West said, the shift would reduce cross-border tax costs and increase the potential for a wider range of investors as the stock gets included in more indexes and exchange-traded funds.

Encana Corp., now known as Ovintiv Inc. OVV-T, and Brookfield Asset Management BAM-T are among companies that have redomiciled in the U.S. in response to expansion of operations in that country and a desire for more passive investment in a much larger market for vehicles such as index funds.

The move can be unpopular in Canada, though, especially in the current political and trade environment. A month after President Donald Trump began his second term as U.S. president in 2025, Montreal based trucking company TFI International Inc. TFII-T said it would shift its headquarters south, but reversed the decision in response to fierce shareholder backlash.

For Algonquin, the redomicile could lead to inclusion within Russell, S&P and CRSP benchmarks, but deletion from some Canadian indexes, said Robert Hope, analyst at Bank of Nova Scotia. Because U.S. indexes are larger, passive investment inflows would offset Canadian selling over time, Mr. Hope wrote in a note to clients.

“The timing may be uneven, with near-term weakness possible as deletions precede additions, but the longer-term effect is a structural improvement in demand for AQN shares,” he said.

Mr. Hope noted that shares in eight Canadian companies that have redomiciled since 2018 fell because of selling by Canadian institutions, then recovered as U.S. investors and indexers bought in. This effect could be muted with Algonquin, however, because of its already-large U.S. shareholder base, he wrote.

Activist investors, led by New York-based Starboard Value LP, held 8.65 per cent of Algonquin stock as of March 31, according to S&P Capital IQ.

Algonquin shares were off more than 1 per cent at $7.94 on the Toronto Stock Exchange Friday afternoon. The company announced the redomicile plan in conjunction with its second-quarter results, in which it reported that net earnings fell 67 per cent from the same quarter a year earlier.

The shares are down more than 10 per cent in the past six months and are well below highs of more than $20 last hit in 2021.

Investors had once benefited from Algonquin’s renewable power and utility assets, which allowed a steadily rising dividend. However, rapid expansion and a heavy debt load forced the company to cut the dividend twice and prompted the sale of its renewable business for US$2.5-billion in 2024.

Since becoming CEO last year, Mr. West has rebranded Algonquin as a pure-play regulated generation, transmission and distribution utility business, with companies operating in 13 U.S. states, Bermuda, Chile and Canada.

He declined on Friday to offer the company’s expected cost of the redomicile to the U.S. but said he believes the recurring benefit will outweigh the one-time cost.

“Overall, we believe this positions us to more effectively execute on our strategic priorities and enhance long-term shareholder value,” he told analysts.

In the second quarter, net income was US$4.9-million, or 1 U.S. cent a share, down from year-earlier US$14.8-million, or 2 U.S. cents.

The company said higher regulated rates in some of its U.S. markets were offset by higher operating and interest expenses as well as unfavourable weather.